Chapter 9 -

Question 1

Define unemployment rate

Answer 1

The percentage of the labor force that is unemployed.

Question 2

What is the unemployment rate calcuation

Answer 2

UnemploymentRate=
(NumberofUnemployed / Labour force) x 100
​

Question 3

Define labour force participation rate

Answer 3

The percentage of the adult population that is in the labor force.

Question 4

What is the labour force participation rate formula

Answer 4

(Labour force / adult population )x 100

Question 5

What is the natural rate of unemployment

Answer 5

The normal rate of unemployment around which the unemployment rate fluctuates.

Question 6

What are the components of the natural rate of unemployment

Answer 6

Structural unemployment and frictional unemployment.

Question 7

What is cyclical unemployment

Answer 7

The deviation of unemployment from its natural rate, associated with business cycles.

Question 8

What are the types of unemployment

Answer 8

1. Frictional unemployment
2. Structural Unemployment
3. Cyclical unemployment

Question 9

Define frictional unemployment

Answer 9

Short-term unemployment that occurs when people are between jobs or are entering the labor market for the first time.

Question 10

What is the cause of frictional unemployment

Answer 10

job search time, geographic mobility, industry changes

Question 11

Provide an example of frictional unemployment

Answer 11

A recent college graduate looking for their first job.

Question 12

Define structural unemployment

Answer 12

Long-term unemployment that occurs when there is a mismatch between the skills of workers and the requirements of jobs.

Question 13

What are the causes of structural unemployment

Answer 13

Technological changes, globalization, changes in consumer demand.

Question 14

Provide an example of structural unemploymnet

Answer 14

Factory workers losing jobs due to automation.

Question 15

Define cyclical unemployment

Answer 15

Unemployment that rises during economic downturns and falls when the economy improves.

Question 16

What is the cause of cyclical unemployment

Answer 16

fluctuations in economic activity

Question 17

what is an example of cyclical unemployment

Answer 17

increased unemployment during a recession

Question 18

What ways do you measure unemployment

Answer 18

1. labour force
2. unemployment surveys
3. discouraged workers

Question 19

define labour force

Answer 19

The total number of workers, including both the employed and the unemployed.

Question 20

What are the exclusions to the labour force

Answer 20

Retired individuals, full-time students, homemakers, discouraged workers.

Question 21

What survey is used for unemployment and provide a definition

Answer 21

Current Population Survey (CPS): A monthly survey conducted by Statistics Canada to measure employment, unemployment, and labor force participation.

Question 22

What is meant by discouraged workers

Answer 22

Individuals who would like to work but have given up looking for a job due to poor prospects.

Question 23

What are the factors that affect the natural rate of unemployment

Answer 23

1. job search
2. minimum wage laws
3. unions and collective barganing
4. efficiency wages
   5.

Question 24

Why is job search a factor that affects the natural rate of unemployment

Answer 24

Time and effort required to match workers with appropriate jobs.

Question 25

Define minimum wage laws

Answer 25

Setting a minimum wage can lead to higher unemployment if it is above the equilibrium wage level.

Question 26

Define unions and collective barganing

Answer 26

Can lead to higher wages and lower employment in unionized sectors.

Question 27

Define Efficiency wages

Answer 27

Employers may pay above-equilibrium wages to increase productivity, reduce turnover, and attract better applicants, potentially increasing unemployment.

Question 28

What are the policies to reduce unemployment

Answer 28

1. job training programs 2. unemployment insurance 3. job search assistance

Question 29

define job training programs

Answer 29

Government programs to help workers acquire skills needed in the current job market.

Question 30

Define unemployment insurance

Answer 30

Provides temporary financial assistance to unemployed workers, which can reduce the urgency of finding new employment but also support consumer spending.

Question 31

Define job search assistance

Answer 31

Services to help match job seekers with employers, reducing frictional unemployment.

Question 32

How does the impact of technological change affect unemployment

Answer 32

Technological advancements can increase structural unemployment as certain skills become obsolete.

Question 33

How does globalization affect unemployment

Answer 33

Global competition can lead to job losses in certain industries but can also create jobs in other sectors.

Question 34

How do economic policies affect unemployment

Answer 34

Expansionary fiscal and monetary policies can reduce cyclical unemployment during economic downturns.